Natural gas futures jump ahead of inventory report, faces resistance at Rs 275 level

Natural gas futures traded firm on July 15 as the market players await Energy Information Administration (EIA) weekly inventory report later in the day. The gas prices had declined 0.9 percent yesterday on the NYMEX.

The energy commodity pared earlier gains after a gap-up start, tracking the positive global trend.

On the MCX, natural gas delivery for July gained Rs 1.40, or 0.51 percent, to Rs 274.10 per mmBtu at 14:49 hours with a business turnover of 15,933 lots.

Gas delivery for August soared Rs 1.10, or 0.40 percent, to Rs 273.60 per mmBtu with a business volume of 2,882 lots.

The value of July and August contracts traded, so far, is Rs 533.77 crore and Rs 60.02 crore, respectively.

MCX iCOMDEX Natural Gas Index rose 13.44 points or 0.40 percent to 3,343.74.

Sriram Iyer, Senior Research Analyst at Reliance Securities said, “International natural gas futures have started flat to trade marginally higher this Thursday morning and early afternoon trade ahead of inventory data. Technically, NYMEX Natural Gas could trade in a range of $3.550-$3.750 levels.”

“On the domestic front, MCX Natural Gas July holds strong support near Rs 271-Rs 268 levels whereas resistance is at Rs 275-Rs 278 levels”, Iyer noted.

As per National Oceanic Atmospheric Administration (NOAA) report, the weather is expected to remain warmer than normal for the next two weeks, on the East and West Coast with cooler than normal weather in the South.

Kotak Securities said natural gas has been range-bound amid mixed factors. The general bias however may be on the upside amid tightening in US gas stocks. Focus may continue to be on US weather and trend in energy prices, storm activity in the Atlantic and weekly rig activity report.

Technicals

The commodity has been trading higher than 20, 50, 100 and 200-day moving averages but lower than the 5-day moving averages on the daily chart. The momentum indicator RSI is at 64.43, which suggests upbeat movement in the price.

Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited said, “The natural gas price has key resistance at 15-SMA of intraday chart placed near Rs 275. The price has moved lower ahead of the inventory report set to release in today’s session. Expectations are for a 48 Bcf build in stockpiles.”

At 09:23 GMT, the natural gas price was up 0.30 percent at $3.67 per mmBtu in New York.

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